Vodafone has made a series of moves to boost its position in Greece’s TV market. These include a €118 million ($145 million) deal to acquire the Greek operations of Cypriot telco CYTA, struck in in January 2018. This followed a September 2017 partnership agreement with pay TV operator Nova that saw Vodafone gain carriage Nova’s six sports channels for Vodafone’s IPTV platform.

Further developments are in the offing, with continued press speculation that Forthnet, Greece’s second-largest telco after incumbent OTE, could be the subject of a joint-venture takeover by Vodafone and fellow telco Wind Hellas, which together already hold a minority stake in the operator.

Other reports suggest that Vodafone may launch a standalone online video service in early 2018, as it has done in Turkey. Meanwhile, global SVOD giant Netflix has discussed the possibility of partnering with telcos in Greece, including the likes of Vodafone and Wind, to make Netflix directly accessible to those operators’ TV customers.

Our analysis

Vodafone is executing an expansion plan in Greece by investing in both its core telecoms services and value-added services like TV and online video. This comes in parallel to investments in TV in neighbouring Turkey, where Vodafone has launched a standalone online video service and has enriched its content portfolio, following a deal with SPI International for carriage of eight channels. This recent activity indicates that the telco is betting on the growth potential of subscription TV and video in two countries where pay TV is currently underperforming – penetration stands at around 24% in Greece and around 30% in Turkey, according to IHS Markit data.

The acquisition of CYTA is a great fit for Vodafone’s strategy. Vodafone is already very familiar with CYTA’s business, as the Cypriot telco was using Vodafone’s core mobile network to offer its services as an MVNO in Greece. Furthermore, gaining CYTA’s subscriber base of 307,000 fixed subscribers and 51,000 mobile subscribers will help Vodafone to increase its market share in Greece and challenge the market leader OTE. This challenge requires high-quality infrastructure, which is what Vodafone is getting with CYTA’s 5,500 km fibre network. In addition to this, Vodafone is planning to invest up to €500 million between 2017 and 2020 to build an FTTH network covering the majority of the urban centres in the country.

The sports channels carriage deal with Nova is significant, as it brings Greek Football League and Euroleague Basketball – considered premium content in Greece – to Vodafone TV customers, and leaves the telco well placed to attract new subscribers.

The outcome of Vodafone’s bid to gain ownership of Forthnet will be pivotal for the telco’s TV ambitions in Greece. Forthnet is the second largest pay TV operator in the country, after OTE’s Cosmote, with around 425,000 subscribers at the end of 2017, according to IHS Markit. It is also the second largest fixed broadband operator, with around 540,000 subscribers. Vodafone is making a joint bid for Forthnet with Wind. The two companies are already minority shareholders, controlling around 13% of shares in the company, while the bulk of the shares – around 68% – are under the control of four Greek banks. Vodafone and Wind are not the only interested parties, however. Other potential buyers include: free-to-air broadcaster Antenna Group, which submitted a bid in partnership with private equity fund Providence; Hong-Kong based telco PCCW; and three private equity funds – Apollo Capital Management, Global Tree Asset Management and Pillarstone. The successful bidder is expected to be announced by the end of March 2018.

In another development, Deutsche Telekom is expected to exercise its contractual right to acquire a further 5% of OTE, to add to its current shareholding of 40%. This 5% stake is under the control of the Greek government, and its sale is being motivated by the State’s need to pay the national debt.